By Tony Munroe and Charlie Zhu - Analysis
SHANGHAI (Reuters) - China's plans to develop a corporate bond market are moving closer to fruition, but a lack of infrastructure and an obsession with high-flying equities mean it could be years before the market builds critical mass.
Corporate bonds are expected to take off eventually, however, as Chinese companies seek financing beyond stock offerings, which dilute earnings per share, and bank loans.
Investors, especially insurers and pension funds, are also looking for options in addition to stocks, property, government bonds and low-yielding deposits.
"We hope to see smooth development of the corporate bond market," said Mandy Wang, chief executive of JPMorgan's (JPM.N: Quote, Profile, Research, Stock Buzz) 49 percent-owned China International Fund Management Co.
"China's capital market only has one leg at the moment," she told the Reuters China Century Summit this week in Shanghai.
Beijing last month shifted the oversight of bond issuance by listed firms to the China Securities Regulatory Commission (CSRC), which also oversees the stock market, in an effort to spur the stagnant corporate bond market.
On Thursday, CSRC Chairman Shang Fulin said the first corporate bond to be issued under the supervision of his agency would reach the market soon.
Market watchers expect the first wave of bonds to come from a prospective pool of about 20 issuers looking to raise roughly 100 billion yuan (US$13.3 billion). Continued...
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